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National Marketing vs. Atlas

1) National Marketing Corporation contracted with Atlas Trading to purchase 8,000 metric tons of galvanized steel sheets, with the condition that Atlas provide a P100,000 performance bond. 2) A letter of credit was issued in favor of West India Commercial, Atlas's principal, but it contained discrepancies from the sales contract. 3) The trial court dismissed the case, ruling that the discrepancies in the letter of credit meant the condition precedent was not met, so no liability attached to Atlas.

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203 views1 page

National Marketing vs. Atlas

1) National Marketing Corporation contracted with Atlas Trading to purchase 8,000 metric tons of galvanized steel sheets, with the condition that Atlas provide a P100,000 performance bond. 2) A letter of credit was issued in favor of West India Commercial, Atlas's principal, but it contained discrepancies from the sales contract. 3) The trial court dismissed the case, ruling that the discrepancies in the letter of credit meant the condition precedent was not met, so no liability attached to Atlas.

Uploaded by

Janlo Fevidal
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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NATIONAL MARKETING CORPORATION vs.

ATLAS TRADING DEVELOPMENT


CORPORATION and the ALTO SURETY and INSURANCE CO. ISSUES & RATIO.
G.R. No. L-21979/September 19, 1967
WON Atlas Trading may be held liable? – NO.
DOCTRINE. Where, therefore, legal relations arise from a letter of credit, such letter
contains the entire contract of the parties, and their resulting obligations should be The failure to open a letter of credit within a period agreed upon suffices to prevent a binding
measured by its provisions. It constitutes the complete agreement, and is independent of juridical tie from being created. That case, dealing with offer and acceptance, reiterated the
the contract of sale between the buyer and the seller, and is unaffected by any breach of principle that to bind the offer or, "the offeree must comply with the conditions of the offer."
contract on the part of the seller or the buyer or by any controversy which may arise The situation before us deals with a perfected contract.
between the buyer and seller or by any other transaction between the buyer and seller.
In this case, the time element does not enter into the failure of one party to live up to the terms
FACTS. of the contract. What was manifest was the discrepancy between what was agreed upon in
 Atlas offered to sell to National Marketing 8,000 metric tons of galvanized sheets at the the contract and the letter of credit, the effectivity of which requires that "all conditions
price of U.S. $247 per ton of 1,000 kilos. National made an order and agreed to purchase contained [in it] be strictly complied with, however, onerous they may be."
the galvanized sheets offered by defendant Atlas with the condition that the seller
should furnish a performance bond in favor of the plaintiff in the amount of P100,000.00 Plaintiff-appellant must have been mindful of the force and applicability of the above
controlling principle. In its Brief, it sought to avoid its application by alleging that by its very
 National and defendant Atlas as sales brokers for West India Commercial Corp. of New nature "a letter of credit cannot contain all the particulars nor can it embody all the
York City, N.Y., U.S.A. executed a contract of purchase and sale wherein the said agreements previously entered into by the parties for the terms and conditions of their
defendant obligated itself to sell 8,000 metric tons of galvanized steel sheets, at the price agreement are already contained in separate documents.
of U. S. $247 per ton of 1,000 kilos.
Where, therefore, legal relations arise from a letter of credit, such letter contains the entire
 Neither Atlas nor its principal the West India Commercial Corp. of New York delivered contract of the parties, and their resulting obligations should be measured by its provisions. It
the 8,000 metric tons of galvanized steel sheets involved in the contract. Plaintiff sought constitutes the complete agreement, and is independent of the contract of sale between the
to recover liquidated damages from Atlas. It likewise prayed that defendant Alto be buyer and the seller, and is unaffected by any breach of contract on the part of the seller or
condemned to pay the plaintiff the amount of P100,000.00, the amount of the the buyer or by any controversy which may arise between the buyer and seller or by any other
performance bond. transaction between the buyer and seller.

 Defendant Atlas admitted making the offer adding however that plaintiff was duly
informed of that it was acting in its representative capacity and that the letter of credit
being in favor of the beneficiary, West India Commercial Company of New York, New
York, U. S. A., could not be utilized in view of what was considered "serious discrepancies
between the terms of the said letter of credit and the contract;" no delivery of the 8,000
metric tons of galvanized steel sheets, was made as there was no obligation to do so, but
even if it arose, "delivery was made impossible by the prior rescission of the contracts by
plaintiff."

 Defendant Alto denied the allegations of the complaint claiming that it never incurred
any obligation at all under the contract which was the basis of the complaint "as it was
never a party to it, nor did it authorize anyone to obligate it in any manner whatsoever,"
and that plaintiff "having discharged the West India Commercial Corporation of New
York from liability on said contract, [defendant Alto] is and must likewise be discharged,
the obligation of the surety being merely accessory to that of the principal."

 The lower court dismissed the complaint on the ground that because there was a
discrepancy concerning the needed letter of credit (which the court ruled as a condition
precedent), no liability could attach to defendant Atlas.

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